Despite uncertainties in the market and a shifting regulatory environment, the overwhelming majority of capital markets firms say they will increase technology investment in 2013 according to a survey IPC recently conducted.
The survey asked over 100 traders, back office staff, senior executives and IT management professionals in capital market firms where they expect their firms to invest in 2013, and among other things, whether investment was due to increase or decrease.
At a time when the complexities of today’s trading market are building, competition is increasing and margins are shrinking, the results of this survey showed that despite it all trading firms are poised to combat these challenges head on, through increased technology spending.
The key takeaways from this survey are three-fold. There are strong implications for traders, the risk department, and the IT department.
It is clear that traders are a top source of investment for financial firms.
Electronic trading (48 percent) and trader/trading desk/floor (40 percent) are anticipated as the top areas for technology investment during 2013
Thirty percent expect their firm to invest in mobile trading devices or applications, with 45 percent expected to invest in desktop trading applications/software – this shows the importance that is accorded to trader productivity
Improving cost efficiency and competitiveness are key investment drivers for 2013
Seventy-six percent expect their firm’s investment in technology to increase in 2013, yet with 48 percent saying Improving efficiency and cost effectiveness is the primary driver and 39 percent indicating gaining competitive advantage as key.
Only 33 percent said that they expected their firm to invest in trading support technology (research, risk, compliance) during 2013
Twenty-eight percent recognised that applications offering greater collaboration between on and off floor traders and support staff would benefit the firm in terms of either efficiency, regulatory compliance or competitive advantage
Effective market data integration is viewed as central to gaining competitive edge
Improving cost efficiency and effectiveness (48 percent) and gaining competitive edge (39 percent) were listed as the two primary drivers of technology investment in 2013
Looking specifically at trading technology, 35 percent said they expected their firm to invest in market data or other feeds in 2013
Fifty-one percent said that applications providing greater integration of market data with trading communication systems would benefit the firm in terms of either efficiency, regulatory compliance or competitive advantage
These survey results confirm what we have seen over the past year or so. Firms see tremendous opportunities to achieve greater competitive advantage by investing in technologies that allow traders to do their jobs more efficiently and effectively. Unfortunately regulations along with increased complexity can slow down the trading cycle. In the current regulatory environment with new and changing regulations becoming the norm technological investment is absolutely necessary to maintain strong position in the market.
Firms see that new technologies have the ability to make collaboration between traders and off-floor support staff faster, easier and more comprehensive. These can give them an advantage in speed, adaptability and innovation, as well making it easier to ensure regulatory compliance.